Question

In this discussion, you need to provide a new example of a free rider problem and a positive or a negative externality .

Answer 1

National defence is an example of a Free rider problem and this is because it is not a profitable business with which the government should act in producing the public goods with which over usage can happen and this can lead to less efficiency and ultimately the government will have to bear the cost in promoting the National defence. One example of a positive externality is is education where education induces more productivity in an individual and ultimately this reduces the prices of the goods where the society will benefit from it